Standard Life Aberdeen has sold its insurance arm to Phoenix in a £3bn deal.
In the first results since the merger of Standard Life and Aberdeen Asset Management, the firm has said it has decided to exit the insurance market.
Phoenix will pay a total of £2bn in cash for the business. Standard Life Aberdeen will then take a 19.9 per cent shareholding in Phoenix, increasing the total value of the deal to £3.2bn.
Aberdeen Standard Investments currently manages around £48bn on behalf of Phoenix in a partnership deal that has also been extended today.
Co-chief executives Martin Gilbert and Keith Skeoch said that the deal was the “logical next step” in transitioning the firm into a “world class investment company.”
Standard Life Abderdeen says in a statement: “While the long-term savings market in the UK is supported by attractive structural growth trends, the board believes that Standard Life Aberdeen can best capture the benefits of these growth dynamics through Aberdeen Standard Investments and its retail platforms. In partnering with Phoenix Group, whose expertise is in administering and servicing long-term savings, Standard Life Aberdeen is able to realise attractive value for the disposed businesses, while continuing to benefit from access to related assets and flows.”
Earlier this month, Standard Life Aberdeen suffered a blow as Scottish Widows parent Lloyds Banking Group withdrew £109bn in mandates from the firm, citing competition concerns over the newly merged brand.
Scottish Widows said it could reconsider the mandates if Standard Life Aberdeen made changes to ensure it was not competing in Scottish Widows’ core areas.
The deal with Phoenix is “subject to adjustment in certain circumstances, including if assets or mandates associated with the Phoenix Group…are withdrawn”.
The firm said it remains committed to running all three of its adviser platforms, Standard Life Wrap, Elevate and Parmenion, separately, as to continuing to grow national advice business 1825.
It added that owning advice business and platforms allowed the investment manager to have “greater proximity” to retail customers.
Change at the top
Meanwhile, Standard Life Aberdeen has also announced a number of board changes today. Gerry Grimstone, former Standard Life chairman and chairman of the newly merged company, will stand down by the end of 2019.
Julie Chakraverty, Lynne Peacock and Akira Suzuki will also retire from the board after its next annual general meeting.
This will leave the Standard Life Aberdeen board with two women and eleven men.